He spins on his heels, jabbing on a whiteboard, drawing lines showing the course of financial markets as far back as 1700. What his scribbling indicates, David Kauders says, is that the bubble in financial markets and assets prices has far from burst. Britain's financial Dr Doom is still telling his investors to steer clear of shares and stash all their money in government bonds.

"It's clear to see that this is a bubble, and it's one that's been inflated by credit," Kauders exclaims. "Yet the solution to this bubble has been to create more credit, when debt is the cause of the problem in the first place! The world has reached a debt limit."

Kauders' passion for what he does isn't unusual – as a wealth adviser, he has to manage millions for his job – but the beliefs that drive him most certainly are. He is regarded as one of Britain's gloomiest forecasters, an equities refusenik who won't touch the UK stockmarket with a bargepole.

His dogged belief that channelling all your cash into government bonds paying steady but stodgy low returns, is the only path to a decent return over the long term (see box) has long been pooh-poohed by the investment mainstream, ignored as wilfully contrarian.

For years he warned of perilous levels of over-indebtedness, both personal and commercial, forecasting that it would end in tears when the flow of cheap funds dried up.

In May 2007, just weeks before the sub-prime warning signs began to flash red, his newsletter to investors said: "There is no point in staying in equities to 'wait and see'. You might pick one share that goes up against the trend, but you are highly unlikely to avoid the general malaise when it comes."

This eerie prescience continued elsewhere.

"Buy government bonds now ...[bond] yields will be tumbling once there is growing evidence of bad debts, no matter what the inflation picture may be," he said. "Inflation is likely to disappear as retail spending slows down and consumers retrench."

The rest, of course, is credit-crunched history. As cheap credit dried up and financial institutions tottered amid overwhelming losses on bad debts, global stockmarkets tumbled, along with interest rates and consumer confidence. Investors hastened to store their money in the safest havens – government bonds and cash deposits – vindicating Kauders' strategy, as he protected his clients from the havoc wrought by markets on almost everyone else's pensions and investments.

Although the FTSE 100 has come back from a 3,512 low in March to more than 5,200 this week, Kauders believes this rally will sputter out before heading on its long-term downward trend.

"The cult of the equity has been shown to be risky: the poor periods and declines come round and some investors inevitably lose," he says.

"Now share prices are high, fuelled by more easy credit, and common sense says this cannot last. I remember conditions in late 1974 and early 1975, when the market had fallen 74% from peak to trough, and at the bottom of the cycle, nobody wanted to know.

"On that occasion the twitching corpse revived itself. Revival next time round will come, but first there is the remainder of a major bear market to get through: only then, from disillusion, a revival can come."

But Kauders, despite his success in forecasting the credit crunch, remains on the fringes of the investment community. Critics say that to write off equities as a way to build wealth for the future, despite the roiling stock markets over the past few years, is eccentric, if not downright folly.

Most mainstream long-term investment products open to the public are centred round the stockmarket: pensions, individual savings accounts, unit trusts, investment trusts, child trust funds, with-profits funds and endowment policies. Critics acknowledge the failings of these products in recent years, but say history still supports the concept of investing in shares.

After all, what about the great stock market bull run from 1974 to 1999 that ended with the FTSE 100 peaking at 6,930. Surely, investing during this period would have yielded great results?

"Yes, well, stockmarkets are all well and good if you can get the timing right, but where's the evidence that anybody has been doing so?" he asks.

"The stockmarket, overall, does not create wealth. This is because, over the entire cycle of bull and bear markets, gains and losses must be equal; then costs must be deducted."

What the market does, he stresses, is make individuals better off if they understand how it works and are prepared to step aside for long periods of time – "even decades".

Kauders says he hasn't bought a single share in 23 years. And the FTSE 100 index would have to hit 1,000, an eye-poppingly low figure compared to current levels, for him to do it again.

"In the early days we were equity investors, but we pulled out in 1986: Japan was the predominant story and we sold out [when the Nikkei share index was] at 19,000 on the way up." That index topped out at around 39,000 in 1989 but two decades later it still stands below 10,000.

Having researched stockmarket cycles, he decided governments were pumping credit to try to buy economic growth: "I felt it couldn't last and must eventually be counterproductive."

Although Kauders Portfolio Management (gilt.co.uk) doesn't publish performance figures, the near quarter-century in UK and US government bonds has served his clients well, he says. Most are in the very well-off bracket, with Kauders' minimum investment at £250,000. "Clients who came to us in 1992 on average, as a group, now have an annual income yield of 7.3% on original capital invested."

On average, he adds, they have also enjoyed compound capital growth of 1.9% per annum. However, "if you take the start point a couple of years earlier, the figures look better, and a couple of years later, not quite as good."

Essentially, he says, gilts allow investors to carry on earning the income yields of the past into the present and future. "There will be a time when the long-term trends change, but not for many years yet."